Advances in technology are making it possible to generate more data than ever before. We can quantify, measure, and track every single interaction, transaction, and engagement in excruciating detail. And when we collect these “big data,” we can gain tremendous insights into business processes, including global procurement strategy. Because global procurement is focused entirely around obtaining greater efficiencies and streamlining purchasing operations, global procurement is primed to be revolutionized by the insights that stem from big data.
Businesses that collect big data insights are finding that they can refine global procurement strategies and processes with greater precision than ever before. They also can intervene more effectively to resolve problems and challenges, and they can use concrete data instead of intuition and instinct to accomplish this work. One study by the Massachusetts Institute of Technology’s Sloan School of Management found that among companies in the top third within their industry, the use of data-driven decision-making made a company 5% more productive and 6% more profitable than a company that didn’t use data-driven decision-making.
Let’s explore the specific ways that big data insights are revolutionizing the global procurement industry:
- Shorten order-to-delivery times: Traditionally, the procurement timeline has been based largely on individuals using their best judgment and insider knowledge to get the right products and resources to the right place at the right time. No matter how talented people are, however, they’re often no match for a computer algorithm that is specifically designed to optimize timelines and manage all aspects of the ordering and delivery process. Computer-based analytics also can adapt to changing conditions in real time, ensuring that no matter what happens, nothing will slip through the cracks, and order-to-delivery times will continue to be optimized.
- Increase supply chain efficiency: As with managing a procurement timeline, individual people can only manage a supply chain as efficiently as the human brain will allow. Analytics software goes past the limitations of the human brain, processing and interpreting more data points about a supply chain than anyone’s brain could possibly synthesize. In the end, these big-data insights yield more precise predictions about how to optimize the supply chain—and better predictions yield better decisions.
- Lower costs: The goal of global procurement is to achieve cost savings, so it makes perfect sense to use big data insights to optimize all opportunities to lower costs. Analytics software can instantaneously and accurately compute more possible combinations of events and items and scenarios than any human brain could, and computers can also thus make the “sweet spot” recommendation that appropriately balances all of these competing factors.
- Improve supplier-client relationships: Both the supplier and the procurement client benefit from big-data insights. The supplier gets access to invaluable information that helps the supplier more effectively allocate its resources, as well as make plans to deliver on time and on budget. The client benefits by no longer being forced to actively manage every aspect of the procurement process; rather, a computer-based management approach frees the client to focus on building and enhancing relationships with suppliers and on developing creative, out-of-the-box solutions that further enhance procurement processes.
- Eliminate arbitrary decision-making: As much as businesses like to think their managers are making sound decisions, some will inevitably make decisions based on emotion, gut instinct, and self-interest. Big data insights dramatically reduce the chances of this by forcing managers to not only use data-driven analytics to make decisions, but also to be prepared to defend those decisions.
As more businesses turn to big data insights to drive global procurement strategy, it’s important to provide adequate resources to support this transition and to provide adequate time for this transition. When big data insights are integrated effectively into procurement processes, businesses can count on shorter order-to-delivery times, increased supply chain efficiencies, lowered costs, improved supplier-client relationships, and less arbitrary decision-making.